HUL Q4 Results: Profit Rises But Inflation Woes Hit Margin
Hindustan Unilever Ltd.'s profit rose, in line with estimates, but input cost pressures weighed on its margin.
Net profit of India's largest consumer goods maker increased 5% over the year earlier to Rs 2,307 crore in the quarter ended March, according to its exchange filing. That compares with the Rs 2,373.52-crore consensus estimate of analysts tracked by Bloomberg.
HUL Q4 FY22 Highlights (YoY)
Revenue up 11% to Rs 13,767 crore, against the Rs 13,150-crore forecast.
Operating profit rose 8% to Rs 3,301 crore, against the projected Rs 3,215.38 crore.
Margin stood at 24% against 24.5%.
Volume growth was flat in the fourth quarter compared with 2% in the preceding three months as demand slowed and consumers downtraded to low price units because of inflation pressures.
"In challenging circumstances, we have grown competitively and protected our business model by maintaining margin in a healthy range," Sanjiv Mehta, chief executive officer and managing director at HUL, was quoted as saying in the statement.
The company has crossed Rs 50,000-crore turnover this financial year to become the first FMCG company to hit this milestone. Its consolidated revenue rose 11.5% to Rs 52,446 crore in FY22, according to its exchange filing. While there are near-term concerns around inflation and slowing market growth, Mehta is confident of the medium- to long-term prospects.
The maker of Dove soap and shampoo has a greater exposure to raw materials such as palm oil, crude oil and its derivatives, making it more vulnerable than peers amid a surge in prices because of the Russia-Ukraine conflict. It was forced to hike prices for its products more than once in the reported quarter.
Segment-wise, revenue from homecare rose 23.5%, while beauty and personal care as well as food and refreshment grew at 4% and 5%, respectively.
Analysts had predicted a significant contraction in FMCG companies' gross and operating margins in the fourth quarter due to a steep increase in crude-based raw materials and edible oil prices. Makers of soap-to-staples were expected to report sub-5% volume growth in the quarter.
Among HUL's peers, Nestle India Ltd. reported a drop in profit, while Marico Ltd. said it expects “marginal growth” in bottom line as consumption trends remain subdued. Copra price deflation, however, helped with gross margin remaining unchanged over the year earlier. Godrej Consumer Products Ltd. expects its volume growth to be “flat”, and operating profit to fall year-on-year due to input inflation.
Shares of HUL closed 0.37% down before the results were announced compared with a 0.94% loss in the benchmark Nifty 50.
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